GovernmentType: Federation of emirates. Independence: December 2, 1971. Provisional constitution: December 2, 1971.Branches: Executive--7-member Supreme Council of Rulers, which elects president and vice president. Legislative--40-member Federal National Council (consultative only). Judicial--Islamic and secular courts.Administrative subdivisions: Seven largely self-governing city-states.Political parties: None. Suffrage: None.Central government budget (1990): $4.3 billion.Flag: A vertical red stripe on the staff side and three horizontal stripes--green, white, and black from top to bottom--on the right.

PEOPLEOnly 15-20% of the total population of 1.8 million are UAE citizens. The rest include significant numbers of other Arabs--Palestinians, Egyptians, Jordanians, Yemenis, Omanis--as well as many Iranians, Pakistanis, Indians, Filipinos, and West Europeans.

The majority of UAE citizens are Sunni Muslims with a small Shia minority. Most foreigners also are Muslim, although Hindus and Christians make up a portion of the UAE's foreign population.

Educational standards among UAE citizens population are rising rapidly. Citizens and temporary residents have taken advantage of facilities throughout the country. The UAE University in Al Ain had roughly 10,000 students in 1990. A network of technical-vocational colleges opened in 1989.

HISTORYThe UAE was formed from the group of tribally-organized Arabian Peninsula shaikhdoms along the southern coast of the Persian Gulf and the northwestern coast of the Gulf of Oman. This area was converted to Islam in the 7th century; for centuries it was embroiled in dynastic disputes. It became known as the Pirate Coast as raiders based there harassed foreign shipping, although both European and Arab navies patrolled the area from the 17th century into the 19th century. Early British expeditions to protect the India trade from raiders at Ras al-Khaimah led to campaigns against that headquarters and other harbors along the coast in 1819. The next year, a general peace treaty was signed to which all the principal shaikhs of the coast adhered. Raids continued intermittently until 1835, when the shaikhs agreed not to engage in hostilities at sea. In 1853, they signed a treaty with the United Kingdom, under which the shaikhs (the "Trucial Shaikhdoms") agreed to a "perpetual maritime truce." It was enforced by the United Kingdom, and disputes among shaikhs were referred to the British for settlement.

Primarily in reaction to the ambitions of other European countries, the United Kingdom and the Trucial Shaikhdoms established closer bonds in an 1892 treaty, similar to treaties entered into by the UK with other Gulf principalities. The shaikhs agreed not to dispose of any territory except to the United Kingdom and not to enter into relationships with any foreign government other than the United Kingdom without its consent. In return, the British promised to protect the Trucial Coast from all aggression by sea and to help out in case of land attack.

In 1955, the United Kingdom sided with Abu Dhabi in the latter's dispute with Saudi Arabia over the Buraimi Oasis and other territory to the south. A 1974 agreement between Abu Dhabi and Saudi Arabia would have settled the Abu Dhabi-Saudi border dispute; however, the agreement has yet to be ratified by the UAE Government and apparently is not recognized by the Saudi Government. The border with Oman also remains unsettled.

In 1968, the UK announced its decision, reaffirmed in March 1971, to end the treaty relationships with the seven Trucial Shaikhdoms which had been, together with Bahrain and Qatar, under British protection. The nine attempted to form a union of Arab emirates, but by mid-1971 they were unable to agree on terms of union, even though the termination date of the British treaty relationship was the end of 1971. Bahrain became independent in August and Qatar in September 1971. When the British-Trucial Shaikhdoms treaty expired on December 1, 1971, they became fully independent. On December 2, 1971, six of them entered into a union called the United Arab Emirates. The seventh, Ras al-Khaimah, joined in early 1972.

GOVERNMENTAdministratively, the UAE is a loose federation of seven emirates, each with its own ruler. The pace at which local government in each emirate evolves from traditional to modern is set primarily by the ruler. Under the provisional constitution of 1971, each emirate reserves considerable powers, including control over mineral rights (notably oil) and revenues. In this milieu, federal powers have developed slowly. In October 1986, the provisional constitution was extended for another 5 years and probably will be extended for another 5 years in December 1991.

The constitution established the positions of president (chief of state) and vice president, each serving 5-year terms; a Council of Ministers (cabinet), led by a prime minister (head of government); a supreme council of rulers; and a 40-member National Assembly, a consultative body whose members are appointed by the emirate rulers. President Shaikh Zayyed bin Sultan Al Nahyyan has been president of the UAE since it was founded. His current 5-year term ends in December 1991, but it seems likely he will be elected to another 5-year term.

The UAE maintains an embassy in the United States at 600 New Hampshire Avenue NW, Suite 740, Washington, DC 20037 (tel. 202-338-6500). The UAE Mission to the UN is located at 747 3d Avenue, 36th Floor, New York, NY 10017 (tel. 212-371-0480).

POLITICAL CONDITIONSThe relative political and financial influence of each emirate is reflected in the allocation of positions in the federal government. The ruler of Abu Dhabi, whose emirate is the UAE's major oil producer, is president of the UAE. The ruler of Dubai, which is the UAE's commercial center and a significant oil producer, is vice president and prime minister.

Since achieving independence in 1971, the UAE has worked to strengthen its federal institutions. Nonetheless, each emirate still retains substantial autonomy, and progress toward greater federal integration has slowed in recent years. A basic concept in the UAE Government's development as a federal system is that a significant percentage of each emirate's revenues should be devoted to the UAE central budget.

The UAE has no political parties. There is talk of steps toward democratic government, but nothing concrete has emerged. The rulers hold power on the basis of their dynastic position and their legitimacy in a system of tribal consensus. Rapid modernization, enormous strides in education, and the influx of a large foreign population have changed the face of the society but have not fundamentally altered this traditional political system.

DEFENSEThe Trucial Oman Scouts, long the symbol of public order on the coast and commanded by British officers, were turned over to the UAE as its defense forces in 1971. The UAE Armed Forces, consisting of 60,000 troops, are headquartered in Abu Dhabi and are primarily responsible for the defense of six of the seven emirates. Dubai's central military command (12,000 troops) has primary responsibility for Dubai's defense.

The UAE military relies heavily on troop force from other Arab countries and Pakistan. The officer corps, however, is composed almost exclusively of UAE nationals.

The UAE air force has about 1,800 personnel. Equipment includes French Mirage 3s and 5s and newly purchased Mirage 2000s, British Hawk aircraft, and French helicopters. The newly revitalized air defense has a Hawk missile program for which the US is providing training. The UAE has taken delivery of two of five Triad I-Hawk batteries. The UAE navy is small--about 1,000 personnel--and maintains 12 well-equipped coastal patrol boats.

The UAE contributes a few hundred troops to the Gulf Cooperation Council's "Peninsula Shield" force, headquartered in Saudi Arabia. These forces participated in the recent Gulf war.

ECONOMYPrior to the first exports of oil in 1962, the UAE economy was dominated by pearl production, fishing, agriculture, and herding. Since the rise of oil prices in 1973, however, petroleum has dominated the economy, accounting for most of its export earnings and providing significant opportunities for investment. The UAE has huge proven oil reserves, estimated at over 100 billion barrels in 1990, with gas reserves estimated at over 200 trillion cubic feet; at present production rates, these supplies would last well over 100 years.

In 1990, the UAE produced about 2 million barrels of oil per day--of which Abu Dhabi produced approximately 80%--with Dubai, and Sharjah to a much lesser extent, producing the rest. The UAE's oil production rose significantly in the latter half of 1990 after the outbreak of the Gulf war. The UAE is embarking on a major expansion of production capacity during the next 5 years.

In 1990, GDP increased substantially as a result of soaring oil revenues, but many companies in the non-oil sector were hit hard by a general slowdown in business during the period leading up to the Gulf war. The oil sector remains the chief determinant of growth in the UAE economy by virtue of its major contribution to the GDP. The preliminary estimate of 1990 GDP is $34 billion, up 23% from 1989.

The US has sizable trade with the UAE. In 1990, the US share of the UAE's imports was estimated at 8%. About 4% of the UAE's exports, mainly oil, went to the US. The UAE's major trade partners are Japan, the EEC, and the US.

The increase in the favorable overall balance of trade in 1990--from $5.4 billion in 1989 to $9.5 billion in 1990--was due to boosts in the value of oil and gas exports. The country's imports rose by about 16% from $10 billion in 1989 to $12 billion in 1990, while exports were up by 36% from $15.5 billion in 1989 to $21 billion in 1990. However, the UAE's balance of payments was actually negative for the first time, registering a 300 million loss. This was due to the significant cash outflows from the UAE's military contributions to the liberation of Kuwait, aid to countries affected by the Gulf crisis, and huge capital transfers by individuals and companies during 1990 because of the crisis.

Major increases in imports occurred in manufactured goods, machinery, and transportation equipment, which together accounted for 70% of total imports. Another important foreign exchange earner, the Abu Dhabi investment authority--which controls the investments of Abu Dhabi, the wealthiest emirate--manages an estimated $60 billion in overseas investments.

The depreciation of the dollar caused a considerable increase in the cost of imports from Europe and Asia, especially in the latter half of 1990. There is now a trend toward reducing the country's huge expatriate population, which represents about 90% of the total UAE work force of 650,000. From now on, imports of new labor will depend on the specific requirements of a new project.

Over 200 factories operate at the Jebel Ali complex in Dubai, which includes a deep water port and a free-trade zone for manufacturing and distribution in which all goods for re-export or transshipment enjoy a 100% duty exemption. A major power plant with associated water desalination units, an aluminum smelter, and a steel fabrication unit are prominent facilities in the complex.

Except in the free trade zone, the UAE requires at least 51% local citizen ownership in all businesses operating in the country as part of its attempt to place Emiris into leadership positions.

As a member of the Gulf Cooperation Council (GCC), the UAE participates in the wide range of GCC activities that focus on economic issues. These include regular consultations and development of common policies covering trade, investment, banking and finance, transportation, telecommunications, and other technical areas, including protection of intellectual property rights. The post-Gulf war period should see increased efforts to accelerate economic integration by the UAE and other GCC countries.

FOREIGN RELATIONSThe UAE joined the United Nations and the Arab League and has established diplomatic relations with more than 60 countries, including the US, Japan, the Soviet Union, the People's Republic of China, and most Western European countries. It has played a moderate role in the Organization of Petroleum Exporting Countries, the Organization of Arab Petroleum Exporting Countries, the United Nations, and the GCC.

Substantial development assistance has increased the UAE's stature among recipient states. Most of this foreign aid (in excess of $15 billion) has been to Arab and Muslim countries.

Following Iraq's 1990 invasion and attempted annexation of Kuwait, the UAE has sought to rely on the GCC, Syria, Egypt, the US, and other Western allies for its security. The UAE believes that the Arab League needs to be restructured to become a viable institution.

U.S.-UAE RELATIONSThe United States has enjoyed friendly relations with the UAE since 1971. Private commercial ties, especially in petroleum, have developed into friendly government-to-government ties which include security assistance. The breadth, depth, and quality of US-UAE relations are increasing dramatically as a result of the US-led coalition's campaign to end the Iraqi occupation of Kuwait. The United States was the third country to establish formal diplomatic relations with the UAE and has had an ambassador resident in the UAE since 1974.

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